Tuesday 7 February 2012 12.00 EST
First published on Tuesday 7 February 2012 12.00 EST

After the trauma and disruption of the cuts, public service leaders are, it seems, coming to terms with their newly diminished world. Their mood is of drastically recalibrated expectation mixed with weary realism. As Carolyn Downs, chief executive of the Local Government Association, kicking off last week's Guardian Public Services Summit 2012, explained, trite cliches about doing "more for less" no longer apply. The new reality is: "We will be doing less for less."

Over two days the conference heard that there were no slick and easy solutions to the crisis. Magical cash bailouts would not materialise. Grand structural reforms, ideological visions or "silver bullet" technocratic solutions would simply not succeed. Gone were the days of "heroic leadership" and extravagant investment. The difficult and only realistic way forward was through culture change: small, incremental steps to rebuild often hitherto neglected relationships with communities, service users and staff.

At last year's summit, Suffolk's then chief executive, Andrea Hill, delivered a robust and in parts controversial prospectus for transforming local government through the new vision. This year, Bee was scathing about its failings. It was a "vision without detail", a "blunt instrument", a one-size-fits-all solution pursued too far, too fast, with scant notice taken of what local people wanted. "It did not connect with our communities," he admitted.

Reform – and spending cuts – were still inevitable and necessary, but change had to be sought pragmatically; above all, by establishing "meaningful relations" with local communities and "moving at the pace at which people feel comfortable".

Joanne Roney, chief executive of Labour-run Wakefield council, also argued that the key to sustainable change was local engagement, addressing people's cynicism about the political process and supporting their capacity to share responsibility in social provision the local state could no longer afford to maintain. Councils had to overcome traditional weaknesses in understanding what people want and need. "[To achieve change means] being flexible enough to adapt to the speed and pace of local needs," she said.

Politicians had failed to appreciate the scale of the task facing public services in an era of cuts, argued Peter Fahy, chief constable of Greater Manchester police. Embedded in the culture of the modern police force was a preoccupation with meeting centrally set targets, and an aversion to taking risks. Most officers were "finding it a real challenge to do something more imaginative" than simply achieve tick-box measures of performance.

Culture change was the key to maintaining police cover in the face of swingeing cuts, argued Fahy: finding approaches to policing that reduced demand on the service, rather than chasing bureaucratic targets and meeting ever growing expectations to demonstrate "visible signs of police action". But ministers, he said, had an "obsession with outsourcing [services] as opposed to culture change".

The police could no longer pretend that they could shoulder the burden of tackling crime and antisocial behaviour alone, said Fahy. The key was engaging the public and local businesses in crime prevention. "Over the last 10 years we have told the public they are customers. I do not believe that: we are citizens – we are all citizens – and it [policing] has to be about co-production."

But was there political and organisational space for service innovation amid the cuts? Dan Wellings of Ipsos/Mori pointed out that when asked to rate issues in terms of importance, public service organisations put "funding" at the top (64%) and customer and community engagement at the bottom (2%). While ministers were confident innovation would stem naturally from the cuts – the "necessity is the mother of invention" argument – frontline staff saw innovation as inherently risky – the fear that "we can't afford to fail".

Sir Michael Wilshaw, chief inspector of schools in England, and former head of east London's acclaimed Mossbourne academy, said the key to successful service change was a "relentless" attitude to performance improvement. In schools, it was about driving up professional standards – investing in good teachers and not being afraid to get rid of bad ones – and setting high expectations for pupils.

Kevin Carey, chair of the RNIB for blind and partially sighted people, said a capacity to adapt, innovate and take creative risks would be key skills in the new public service economy. "Bosses say they want creative team players but what they hire are system stoodges," he pointed out. On innovation, he called for different public sector organisations to become physically "perforated" so myriad services could be delivered from one location.

Public services had no choice but to innovate, argued Nick Seddon, deputy director of the Reform thinktank. But success would come from testing and prototyping new ideas, not from centrally directed, top-down "grand projects" such as the government's NHS reform bill. Fear of failure – and of the resultant media approbation – was inevitable, he said: "But in some ways you just have to bear it and get on with it."

The conference heard frustration and despair from the voluntary sector – hyped by ministers as providers of innovative new public services – that they were still largely excluded from public services contracts. Commissioners rated cheapest price over social value, the conference heard. "We are not thinking about how we innovate, we are thinking about how we survive," said Craig Dearden-Phillips, social entrepreneur and chair of the VoiceAbility social enterprise.

Julia Unwin, chief executive of the Joseph Rowntree Foundation, highlighted the important role of nurturing community resilience and skills so citizens can address the social needs that services can't or don't touch. The first person to notice someone has dementia, say, won't necessarily be a public sector worker but the person running the local corner shop, she explained.

The Bishop of London, the Rt Rev Richard Chartres, called for the intangible values of public service to be restored in the face of "a society of strangers and a low-trust world". The political obsession with "targets and figures" had impaired public services' capacity for "connected wisdom," he said. Markets that distorted the outcomes of public services should be judged "innapropriate on moral grounds," he added. At the heart of reform, he suggested, has to be the reconception of public services as the sign of a humane society. He quoted the Beveridge-era Archbishop of Canterbury, William Temple, who had welcomed the creation of a welfare state in the early 1940s with words: "Service is the only true dignity."